FTRCQ WACC - Weighted Average Cost of Capital
The WACC of Frontier Communications Corp (FTRCQ) is 7.9%.
| Range | Selected | |
| Cost of equity | 188.5% - 287.1% | 237.8% |
| Tax rate | 14.1% - 17.3% | 15.7% |
| Cost of debt | 7.3% - 9.1% | 8.2% |
| WACC | 7.0% - 8.8% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 43.71 | 54 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 188.5% | 287.1% |
| Tax rate | 14.1% | 17.3% |
| Debt/Equity ratio | 226.23 | 226.23 |
| Cost of debt | 7.3% | 9.1% |
| After-tax WACC | 7.0% | 8.8% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FTRCQ | Frontier Communications Corp | 226.23 | -0.08 | 0 |
| ALSK | Alaska Communications Systems Group Inc | 0.91 | 1.48 | 0.84 |
| ATNI | ATN International Inc | 2.48 | 0.57 | 0.19 |
| CBB | Cincinnati Bell Inc | 2.5 | 0.36 | 0.12 |
| CNSL | Consolidated Communications Holdings Inc | 3.85 | -0.01 | 0 |
| LICT | LICT Corp | 0.24 | -0.02 | -0.02 |
| SGRB | SigmaBroadband Co | 1.46 | -0.75 | -0.34 |
| T.TO | Telus Corp | 0.88 | -0.06 | -0.04 |
| UPCO.CN | Upco International Inc | 0.05 | 1.17 | 1.13 |
| UTDI.DE | United Internet AG | 0.96 | 1 | 0.56 |
| Low | High | |
| Unlevered beta | 0 | 0.15 |
| Relevered beta | 64.75 | 80.1 |
| Adjusted relevered beta | 43.71 | 54 |
FTRCQ's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for FTRCQ:
cost_of_equity (237.80%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (43.71) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.